Forex News: Yesterday the pair moved lower and came in very close vicinity of the support located at 1.0800 but jumped higher in the afternoon. The Eurozone Industrial Production was lower than expected and the result contributed somewhat to the initial move lower.
The current bounce up is likely to find resistance at the 50 period Exponential Moving Average and the 1.0870 level. If this is the case, then the support at 1.0800 will probably be tested again and possibly broken to the downside. The oversold condition of the Stochastic works against this scenario and favours bullish moves. If the pair bounces above 1.0870 and above the 50 EMA, we will probably see a move close to 1.0945.
Today the Eurogroup meetings take place, attended by the European Central Bank President, finance ministers from the member states and many other personalities from the Eurozone. The meetings are closed to the press but any leak during the day may increase volatility. Once the meetings have concluded, an official statement will be released.
Price touched the support at 1.4350 and bounced perfectly off of it, confirming that this level still has enough strength despite the fact that it was last visited in 2010.
Yesterday’s price action created minor resistance at 1.4475 and we believe this level will be visited again before bearish movement resumes. The Stochastic and Relative Strength Index still need to move away from their respective oversold levels and this increases the probability of a move into 1.4475 or even above it. Overall the picture remains strongly bearish but the bullish correction is still in play.
It’s an important day for the Pound as the Bank of England will announce today at 12:00 pm GMT their interest rate. No change is expected (current 0.50%) but the Monetary Policy Summary released at the same time will reveal the reasons that stood behind the rate decision and maybe clues about a future rate hike. A breakdown of the MPC members’ votes is released at the same time, showing the stance of each member regarding a rate change. The Pound is likely to react strongly so caution is recommended.